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Parachute payments, and rocket payments?

Posted by John Beech on April 14, 2009

As the Premier League season reaches its climax, thoughts at those clubs in or near the relegation zone must be turning to next year’s budget. Let us hope that they are more sensible than the famous occasion in the spring of 2008 , when Paul Jewell, manager of Derby County (under a previous management, it must be stated), famously announced that they had spent their parachute payment before their first season in the Championship had even kicked off (1).

Parachute payments, which are paid out of broadcasting rights, were introduced by the Premier League to help clubs adjust to the financial rigours of life in the Championship, recognising that budgets could only be pruned with difficulty after a perhaps unexpected experience of the ‘drop’. Given the increasing gap between the wealth of the Premier League and the Championship, this seemed a pragmatic solution.

Well, at least it was for the clubs that experienced the drop, and no doubt they are grateful for this easing of their lot having fallen into reduced circumstances. Whether the clubs who have just failed to make it through the Championship play-offs share this view is less clear. For them it must seem an unfair advantage for the ‘fallen ones’ in the new season.

Indeed, it does have a smack of setting clubs up to bounce back – a kind of a whip-round by the PL clubs for their weaker colleagues, with a message of au revoir rather than adieu. In business terms, it is recognising, and in one sense rewarding, failure rather than success.

It strikes me that to recognise success – promotion from the Championship – is every bit as deserving, especially as newly promoted clubs have to adjust their budgets upwards from Day 1 in the Premier League. They need funds immediately to invest in new players of a higher ilk; for the newcomers it must seem an uneven playing field.

Perhaps the Premier League should introduce ‘rocket payments’ – a kind of whip-round to say Welcome! to their new members. It would reduce the phenomenon of yo-yoing, a phenomenon that no-one likes and which does little for the game in general or the clubs it affects. It would also encourage the emergence of new ‘top rank’ clubs.

Which is of course what the existing Premier League members do not want.

8 Responses to “Parachute payments, and rocket payments?”

[…] barrier is the simple and straightforward financial one. In the absence of any rocket payments (qv), unless a club has phenomenal financial backing the prospect of the top tier must remain a dream. […]

[…] struggle to stay up without the initial boost of rocket payments (see my posting of 14 April on Parachute payments, and rocket payments?). More’s the pity; the way the Premier League supports its drop-outs but does not support its […]

[…] many clubs yo-yo, in particular the step up proving problematic in the absence of rocket payments (qv). There are clubs which have come up and now seem to be almost part of the furniture however. […]

[…] that it is over and above thye revenues of your new competitors. What is needed in this case is rocket payments, a much more equitable idea than parachute payments, which reward failure and give relegated clubs […]

[…] parachute payments (as a reward for failure?!) to their unfortunate ‘old boys’ (see Parachute payments, and Rocket payments?) and more recently have started what they outrageously call ‘solidarity payments’. If […]